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What Is a Personal Financial Advisor?


A personal financial advisor is a professional who provides tailored financial guidance to individuals, helping them manage their finances effectively. These experts assess the financial situations, goals and risk tolerance of clients to create comprehensive plans that encompass budgeting, saving, investing and retirement planning. They also offer advice on tax strategies, insurance needs and estate planning.

Whether you need comprehensive planning, investment management or specialized advice, SmartAsset’s free tool can help you get expert advice.

Understanding Personal Financial Advisors

A personal financial advisor is a professional dedicated to helping individuals manage their finances and achieve their financial goals. These advisors typically hold certifications such as Certified Financial Planner™ (CFP®) or Chartered Financial Analyst (CFA), which attest to their expertise and commitment to ethical standards. Their role is to offer personalized financial guidance, tailored to the unique needs and circumstances of each client.

Personal financial advisors perform a wide range of services. They assess clients’ financial health by examining income, expenses, investments and debts. Based on this assessment, they develop comprehensive financial plans that might include budgeting strategies, investment advice, retirement planning, tax planning and estate planning. Advisors stay informed about market trends and economic changes, ensuring their client’s financial plans remain relevant and effective over time.

Types of Personal Financial Advisors

A woman meeting with a personal financial advisor.

When seeking financial advice, it’s important to understand the different types of personal financial advisors available. Each type brings a unique set of skills and expertise. Here are five main categories of personal financial advisors you might encounter.

  • General advisors: These advisors help with a variety of financial needs and often focus on investing for short- and long-term goals, from building wealth to saving for retirement. They often hold certifications with any specific specialties they may have but many hold a CFP® or a CFA if they work with a variety of clients. Many of these advisors work for large firms with names you may recognize.
  • Registered investment advisor: Registered Investment Advisors (RIAs) are firms or individuals that offer investment advice and manage client portfolios. They are registered with the Securities and Exchange Commission (SEC) or state securities regulators, depending on the size of their business. RIAs have a fiduciary duty to act in the best interests of their clients, providing unbiased and personalized investment guidance.
  • Wealth managers: Wealth managers cater to high-net-worth individuals, offering a wide range of financial services beyond just investment advice. These services include estate planning, tax planning, philanthropy, and retirement planning. Wealth managers take a holistic view of their clients’ financial situations, addressing both short-term needs and long-term goals.
  • Specialty advisors: These advisors work with specific types of clients over and over again. For example, a retirement advisor only focuses on helping clients save enough for retirement while a tax advisor only helps you with your tax planning and management.
  • Robo-advisors: Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with minimal human intervention. They are ideal for individuals seeking cost-effective investment management solutions. While they may lack the personalized touch of human advisors, robo-advisors offer convenience and lower fees.

How Much a Personal Financial Advisor Costs

Fees can vary widely depending on the advisor’s qualifications, the services provided and the fee structure they use. Here’s an overview of the types of costs you may encounter.

Personal financial advisors typically charge in one of three ways:

  • Hourly rates: This allows you to pay only for the time and specific advice that you need, making it a cost-effective option if you require occasional guidance.
  • Flat fees: This will offer you predictability and simplicity, as you can pay a set amount for a comprehensive financial plan or specific service, regardless of time spent. This can be advantageous if you want a detailed plan without worrying about hourly costs or fluctuating fees.
  • Percentage of assets under management (AUM): This fee structure can help align the advisor’s interests with yours, as the advisor’s compensation grows with your portfolio. It can be beneficial for clients seeking ongoing management and advice for their investments.

You should also be aware of additional costs, like transaction fees, fund expenses, or performance-based fees. These can add to the overall cost of working with an advisor and should be clearly understood before agreeing.

Bottom Line

A couple reviewing their finances with a personal financial advisor.

Whether you need help navigating complex financial markets, planning for major life events, or simply reaching goals for a comfortable financial future, a personal financial advisor can offer you expertise and support. Working with an advisor not only enhances your financial decision-making but also provides peace of mind, knowing that a knowledgeable professional can guide you step-by-step along the way.

Tips for Retirement Planning

  • A financial advisor can help you create a retirement plan that is specific for your needs. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you’re looking to plan for retirement, consider using a retirement calculator first to estimate how much you may need to save.

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